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Market Segmentation For Holidays – Segment Like A Pro

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Joy to the world, Christmas is coming!

While the world is sipping hot chocolate and making a list of gifts to buy for their loved ones, Marketers like yourself are making sure that their holiday marketing campaigns are on-fleek. And this requires immense amount of prepping before they can launch the most-awaited marketing campaign of the year.

As Christmas marks the end of the year, there is something in the air which makes everyone hunky-dory. Thus, the buying behaviour of shoppers is observed to be different during November-December as compared to the rest of the year.

It’s interesting to note that Holiday Shoppers are different from the Non-Holiday Shoppers in the following ways:

They are typically NOT shopping for themselves but for someone who belongs to a different demography;

They are cost-conscious;

They are fickle with low brand loyalty.

According to the recent report The Ecommerce Holiday Customer Benchmark by RJMetrics, Holiday Shoppers have 13% lower Customer Lifetime Value (CLV) and are not worth a lot. This can be proved with this break-down:

Worried much? Keep calm and continue reading.

The report also added that the holiday season observes an increase in customer acquisition by 29%-59%. Besides, Holiday Shoppers comprise of 23.7% and 19.4% of the annual revenue for holiday-sensitive (computer/electronics, apparels/accessories) and holiday-insensitive (food/drug, health/beauty, houseware/furnishing) retail categories respectively. That’s pretty incredible, don’t you think?

What’s more important to note is that nearly 38.7% of customers make a second purchase within the next 30 days of their first purchase. Now this gives ample of opportunities to you to remarket to segments of holiday marketing campaigns.

Hence, irrespective of the low CLV and even lower loyalty of Holiday Shoppers, our doe-eyed Marketers cannot help but look at them like they are Santa Claus.

Experience the power of Marketing Automation with Holiday Market Segmentation

But before you get started with your christmas marketing campaigns, stop and ask yourself:

“Do I really know my Holiday Shoppers?”

If you don’t then this blog will change that thing for you. Scroll down to know everything about the very-first (and extremely important!) step of launching a successful marketing campaign i.e. Micro segmentation of Holiday marketing campaigns.

Mobile Tech Embracer

Embraces both traditional forms of shopping and new ways of purchasing

Prefers to shop on their mobile device along with browsing, searching, comparison shopping, etc.

Single Cyber Male

An average 36 years old Bachelor

Spends nearly as much on himself as he does on others

Makes purchases via computers rather than on mobile devices

Isn’t likely to bother with lines and crowds for in-store holiday promotions.

PwC, in its 2016 Holiday Outlook report, also identified 3 categories of Holiday Shoppers in the current era on the basis of their age. They are as follows:

Gen Z / Zillennials

Born after 1996 who are falling under the age bracket of 17-20 year

Consider shopping as a social activity as they like going to stores with friends and family

Brand-loyal and tactile who like materialistic stuff like personal electronics, clothes, shoes, and toys

Prefer to communicate via images rather than words using channels like Snapchat and Instagram

Extensively use social media and mobile apps

Prize authenticity and reviews from actual product users and influencers rather than corporate advertising

Hipster

Recent college graduates within the age bracket of 21-30 years

Tech-savvy and well-heeled with sufficient disposable income to spend

Plan to spend more on a vacation than on materialistic stuff

Inclined towards spending one-third of their holiday budget on themselves

Prefer shopping online, often via mobile device, rather than going to a store

Want to receive discounts, promotions, and coupons via e-mail

Follow and sleuth out brands on social media rather than TV

Millennial Parents

Often juggling full-time jobs while caring for young children

Start shopping earlier and indulge in in-store discounts and promotions along with comparison-shopping for best deals

Spend less on themselves as compared to other shoppers

Millennial Moms are avid blog readers who are more active on visual websites and rely on social media to connect with brands

Millennial Dads are staunchly brand-loyal. They are more likely to be mobile shoppers and respond to mobile ads

Open to using alternative delivery options such as click-and-collect, curbside pickup, and third-party-location pickup

Furthermore, Holiday buyers can further be differentiated on the basis of their shopping frequency. They are as follows:

New User

People who are interacting with your brand and/or retail platform for the first time

According to Deloitte’s recent survey, 73% of respondents plan to try new retail stores or websites.

Returning User

People who interacted with your brand and/or retail platform last holiday season (i.e. in 2015) and are paying you a visit after a year-long of lull.

According to RJMetrics, you can expect 7.2% of such users this year.

Regular User

People who interact with your brand throughout the year. They are your active users with high conversion rate.

According to Deloitte’s recent survey, 76% of holiday purchases will be made at stores or through online retailers with which consumers are familiar with.

Niche Segmentation of Holiday marketing campaigns

Hope the above-mentioned classification of Holiday Shoppers has given you a broader idea on how to categorize customers based on attributes like age, buyer personas, purchase behavior, etc.

Once you have that in place, choose any two categories whose interlinking will create a reasonable set of customer segments for you. For instance, I’m using ‘Age’ and ‘Purchase Behaviour’ and presenting them in a tabular form to create 9 new customer segmentation models along with their basic characteristics.

Here is the explanation for each behavioural and psychographic segment:

Now allow me to take you through the detailed Communication Strategy of each segment:

A. New Users

B. Returning Users

C. Regular Users

Benefits of segmentation of your Holiday marketing campaigns

Now that you know how to micro segment your Holiday Shoppers, let’s move on to what benefits you can enjoy from the process:

Engage with a target segment via personalized and relevant messages

Gain deeper understanding of the preferences, needs and goals of the segment

Effective allocation of marketing resources

Potent one-on-one marketing

Identify new products, services or trends which is gaining popularity in that particular segment

What’s next?

Customer Journey Mapping.

It’s the process of mapping and illustrating various stages and touchpoints a customer goes through while engaging with your brand. You can literally design and implement a niche market strategy specific campaign with intricate level of personalisation with the help of journey mapping tools. Here’s an example for you:

Use-case: Post checkout completion, approach Regular Millennial Parents for a review and rating with the help of an NPS Survey in return for 20% cashback on their last billing amount.

Implementation:

Since Millennial Parents are mobile shoppers, we will use In-App Notification (Page Blocker layout) to capture their attention while they are browsing the mobile app. The notification will be kept neat on the christmas and the focus will be on the necessary information like discount value, category, CTA etc.

If the user falling under the segment clicks on the CTA and successfully completes the checkout within the next 2 days of showing the in-app message, an email will be sent to him/her asking for a Review and Rating in return for a cashback reward. This cashback will encourage the user to not only provide the feedback but to also do additional shopping for more cashback.